JURIST - Paper Chase: Milberg Weiss law firm pleads not guilty to fraud

[JURIST] Leading class-action law firm Milberg Weiss Bershad & Schulman [firm website] has pleaded not guilty to fraud and conspiracy charges in US District Court in Los Angeles. In a message e-mailed to the media after Monday's arraignment, the firm described its indictment [PDF text] as "unprecedented and unfair" and expressed confidence that it would be "fully vindicated," echoing an earlier statement [text]. Three individuals have already pleaded guilty in the case [JURIST report]. Two months ago, Milberg Weiss became the largest US law firm ever indicted when it and two of its partners were accused [JURIST report] of having paid up to $11.3 million since 1984 to individuals to serve as lead plaintiffs in class-action and shareholder derivative lawsuits. Prosecutors said Milberg Weiss collected fees of $216.1 million in those cases. In court yesterday, Assistant US Attorney Douglas Axel said additional indictments in the case were a "significant possibility." District Judge John F. Walter [official profile] said he expected to schedule a trial for late 2007. Last month, five other judges recused themselves from the case [JURIST report] because each had owned stock in a company sued by Milberg Weiss in the past, had approved attorneys fees in a suit brought by Milberg Weiss or had been supported by a former Milberg partner when appointed to the federal bench.

Also on Monday, Milberg Weiss was appointed lead counsel in a class-action lawsuit against a bankrupt oil company - one of several such appointments since indictment. The firm has, however, lost a number of partners and clients in that time. Bloomberg News has more. The Los Angeles Times has local coverage.

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